refinance 2nd home or take out big loan

iVillage Member
Registered: 06-07-2007
refinance 2nd home or take out big loan
1
Thu, 07-26-2012 - 11:23am

Hello all, I am coming here from Betrayed Spouses Support.  I need some advice about my boyfriend’s debt.   Here is his dilemma:

2nd home condo: Owe $150,000 (His primary home is paid off)

Home equity loan: owe $50,000

Loan for renovations: need $25,000

Should he take out a loan to cover all these expenses (Quote fixed rated at 3.625%) or refinance condo (They are quoting a variable rate of 3.99%) and take out an additional loan to cover the equity loan and the renovation loan?

Thanks in advance!!  Christy

iVillage Member
Registered: 04-08-2008
Thu, 08-02-2012 - 12:40am

Why is the home equity included in the equation here? Is it a high interest rate? Are you having trouble with the payments? Or are you just including it bc you might as well roll it into the mortgage if you are refinancing?

I'm asking bc if you add $50K to your mortgage and refi for 25 yrs, you will end up paying $79K and $29K in interest to pay off that loan. Better to just keep paying it down faster if you have a decent interest rate.

As for the $25K, why aren't you adding it to your home equity loan? If your home qualifies for $225K refi then you should have the room in there as well. Here in Canada, refi costs money (you have to get a home appraisal and notary, etc).

But my home equity loan is 4% which is comparable to the 3.99 you are quoting for the mortgage. Is your current mortgage higher than that?

Do the math and I'm sure the answer will become clear :smileyhappy:

Dee